Four Smart Moves That’ll Help You Raise Your Credit Score
One of the most important numbers attached to your name is your credit score. If your credit score is not so good, you will definitely feel the affects on your financial life. From getting turned down for a loan to high interest rates on credit cards, you will definitely feel it in your pocket. For these reasons and more, maintaining a good credit score is extremely important. You have access to one free credit report every year from Annualcreditreport.com so take advantage of it.
Below are four key strategies that can help you raise your credit score
What are the credit score ranges?
Before we get into how to raise your credit score, you should know what the ranges are and what is meant by a “good credit score” and a “bad credit score.”
300 to 850 is the range for credit scores and here is how they break down:
- Excellent: 800-850
- Very good: 740-799
- Good: 670-739
- Fair: 580-669
- Poor: 579 and below
Whatever your credit score is, you have the ability to improve it.
1. Pay your credit card at the right time
Your credit utilization ratio (how much you owe divided by your credit limits) is reported to the credit bureaus each month. When they report this is key because whatever your balances are at that time, that is what will be reported. Call your credit card issuers and see when that date is each month. You then want to adjust your payment date accordingly.
As an example, a credit card company may report to the credit bureaus on the 2nd of every month. If you were to pay off your balance one day later, the balance reported would be at its highest in the month. This in turn will make your credit utilization ration higher. Making your payment before the information is reported is what you want to do.
2. Double up on your payments
If making payments on different dates each month sounds overwhelming, paying twice monthly can be the answer. By doing this, your average balance is always lower on each card. You may also want to look into setting up automatic payments so you won’t forget. If you are suffering from an overwhelming amount of debt, bankruptcy may be the answer. On the flip side, if you think you have some errors on your credit report, enlisting a reputable credit repair company may be the answer.
3. Balance out your card usage
If you charge $500 on one card with a $1000 limit and leave your other cards with $0 balances, your overall credit utilization ratio will not be high. The issue with that is that your ratio will be at 50% for just that one card. This in turn will hurt your overall credit score. In order to avoid this, do not go above 20% of the credit limit on any card.
4. Try to get your credit limits raised
The easiest way to increase your available credit and lower your credit utilization ratio, is to try and get your credit limits increased. The only caveat to doing this is that the credit card issuer may do a hard inquiry. This can take some points off your score. So before moving forward with this strategy, find out if you are even likely to get the increase. If you can get substantial credit line increase, it may be worth losing a few points on your score.